Utilitywise Share Discussion Threads

[strongbuy] 29/6/2017 19:23

Once the brokers start running for the hills it could get messy, best to stick to getting paid at the END of the contract IMHO then there can be NO CLAWBACKS !

[highasakite] 29/6/2017 17:29

I expect this company to go bust within 6 months. It stinks.

[masurenguy] 29/6/2017 17:24

Had this on my watchlist but fortunately have never been seriously tempted to take a position. Todays RNS just reveals significant accounting irregularities. Paul Scott summed it up well today.

Projected Under Consumption of Energy Contracts (profit warning) - well the accounting wheels have finally come off! I've been warning readers about this company's dodgy accounting for literally years, in these reports.

Utilitywise is a cost consultant for utilities - so it (supposedly) finds the best deals for businesses for their electricity, gas, etc supplies. The main problem has always been that the company booked revenue & hence profit, a long way in advance of actually being paid their commissions by the energy companies - clearly an imprudent accounting treatment. This gave rise to huge debtors on the balance sheet. The debtors figure on the balance sheet is the total money which has not yet been paid by customers.

Excessive debtors is the single biggest red flag on any balance sheet, in my view. It very often hides all sorts of problems. Excessive debtors often means that the company has been too aggressive in revenue & profit recognition. That has turned out to be the case with Utilitywise. I think all investors should have a point on their checklist, to ensure that debtors are not more than c.60 days sales (inc. VAT). Also look for other, stray debtors, not just trade debtors. Both Globo & Quindell were obviously bad, because they had gigantic & unreasonable debtor balances on their balance sheet.

Today's announcement says that the company over-estimated consumption by some of its customers, and will now have to repay commissions of £7.6m to energy companies. Various excuses are made, and an additional £3.5m charge is also required. So a total hit of £11.2m to the next set of accounts, of which £7.7m is expected to be treated as exceptional. The company says it can work around this, in terms of cashflow. It also says this seems to be a one-off relating to one contract.

My opinion - there's a load more detail given in the RNS today, but I wouldn't bother reading it. The company now has zero credibility. Myself and a few other commentators believed that the accounts were dodgy, and that has now been proven correct. Therefore I would treat this share as a bargepole job. If you can't rely on the accounts, then it's uninvestable.

Does it actually make any real profit at all? Given that so much profit booked in the past has now turned out to be bogus (i.e. based on incorrect assumptions), then I think this share is now impossible to value. I wouldn't count on the high divis being maintained either - because the company has significant net debt. If you write off intangibles, and a chunk of the debtors, then the balance sheet doesn't look great.

Note also the sheer scale of massive Director sells in this stock in the past.

[tsmith2] 29/6/2017 17:02

Anything from Woodford?

[thetruthcomesout] 29/6/2017 16:51

He has a positive spin on things despite the ongoing turmoil

[angel81] 29/6/2017 16:01

You tell me bennywin, i am sure you know them well

[bennywin] 29/6/2017 15:33

I wonder if directors might buy in at this price as a show of confidence ?

[strongbuy] 29/6/2017 15:15

Not sure about that but the whole energy market is the same I'm afraid

Not sure what UTW's mark up policy is or accountancy practice is but there u go!
Better dealing by with the power companies directly or through a comparison site I say !

[thetruthcomesout] 29/6/2017 14:50

I take no pleasure but as I said the truth always comes out, they have been spinning plates for years hoping the whole thing wouldn't come crashing down around them, the shady accounting practises have finally caught up with them. Its the people at the top making these questionable decisions and asking staff to be underhanded and deceitful to customers

[strongbuy] 29/6/2017 14:31

Let me enlighten you all on how the energy market works then take a long cigar and have a think about this:

So the broker or sub broker have a team of agents, the cold call via face to face or over the phone to the potential customer to see if the customer wants to switch their energy account or set up a new account, the latter carries a lot less risk as the consumption for the contracted period should be what it was historically however if a customer goes bust or uses less then the broker is liable to repay a portion of the commission. The real main risk is when a new business sets up and the broker wildly over estimates the consumption and gains a commission , when the real true consumption flow comes through then the power company want their money back and the sub broker has gone bust or ceased trading. For example the customer uses 15,000 kWh per annum and signs a 3 year deal, the power company marks it up at 5p per KWh so that is 15,000 x 5p = £750 x 3 years =£2,250 commission then when the flow comes through the customer only uses 7,500kWh therefore the power company want half the money back - or the broker goes bust but as utw are the principle then it is utw who will be liable to repay the money !!! Gulp ..... keep peeling back the DNA and let's see if it is terminal !

[opodio] 29/6/2017 14:05

will it breach bank covenants

[andrewbaker] 29/6/2017 13:55

For a business that seems to tick all the right boxes for buying, it seems to be very accident prone on performance, both trading and share price. Either it is now far too cheap - in which case will we see Mr. Woodford step in and buy more ?? - or have we been mislead as to the prospects? For anyone believing it is now too cheap, please buy now and put money where mouth says it is.

[opodio] 29/6/2017 13:51

did they have dodgy meters

is this fraud

[kazuko] 29/6/2017 12:29

Wait until the American markets open, they will buy in, they a know bargain when they see one!!

[bennywin] 29/6/2017 12:09

The irony of it all.

[angel81] 29/6/2017 11:48

Hate to say i told you so, this looked like a star a few years ago but it has failed dismally lately. A few on here blindly try to promote which leads me to suspect their true motives and identity, however those with any sense saw the writing on the wall awhile ago.

I hope nobody has lost too much and for those still in, I really hope management can turn this around for the sake of the employees if nothing else. It has to be said though how bad can management be making mistake after mistake....what on earth is next?

[tsmith2] 29/6/2017 11:46

Has Woodford commented?

[1squintyflinty] 29/6/2017 11:43

Will they maintain the dividend?

[smithless] 29/6/2017 10:43

Another great Woodford investment!

[tsmith2] 29/6/2017 10:23

Like the base formation going on. Keeping a watchful eye..